Bengaluru — US retail chain Macy’s on Monday delayed its third-quarter results due to an accounting issue tied to delivery expenses and instead posted preliminary results in which its sales missed Wall Street expectations.
A single employee “intentionally” made wrong accounting entries to hide about $132m to $154m of delivery expenses from the fourth quarter of 2021 through to the end of the third quarter of 2024, it said.
Macy’s had recorded about $4.36bn as delivery expenses in this period.
Shares of the Bloomingdale’s parent, which was set to report results on November 26, fell 2%, as the company said it expected third-quarter sales to drop 2.4%.
“It looks bad... It indicates that they were caught off guard by this,” Morningstar analyst David Swartz said, adding that the error should not worry investors as the amount over three years did not seem significant for Macy’s.
Macy’s said the employee was no longer with the company. An independent investigation showed no involvement by any other employee and there was no sign of the error affecting cash management activities or vendor payments.
Macy’s preliminary results showed net sales fell to $4.74bn slightly lower than the $4.77bn of estimates compiled by LSEG, a sign that steep promotions have failed to draw customers who have turned selective on purchases for the holidays.
CEO Tony Spring, however, said November’s comparable sales were trending ahead of third-quarter levels, in the run-up to the crucial shopping season, where retailers offer big discounts.
Macy’s surprise announcement has amplified concerns of an uncertain holiday season, which is likely to favour large retailers such as Walmart and Amazon.
Target and several other department store chains, however, may see muted sales due to their skewness towards more slightly pricey nonessential items.
Macy’s expects to report its full third-quarter financial results and hold its earnings conference call, in which it will provide its fourth quarter and annual outlooks, by December 11.
“While we work diligently to complete the investigation as soon as practicable and ensure this matter is handled appropriately, our colleagues are focused on ... executing our strategy for a successful holiday season,” Spring said.
Reuters
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